Month: August 2014

Much like they defended the nation against online attacks, leaders of Richardson cloud provider FireHost are now protecting corporate interests against cybercrime.

Founder Chris Drake, a former third-generation paratrooper with the 82nd Airborne Division, built some of the first secure websites for the U.S. Army.

A retired Army colonel, FireHost chief security officer Jeff Schilling oversaw cybersecurity operations and response for more than 1 million computer systems supporting the Army.

And FireHost lead threat intelligence officer Chase Cunningham worked as a chief cryptologist for the National Security Agency to thwart cyberthreats.

While Web hosting providers such as Amazon and IBM dominate the industry, FireHost sees itself foremost as a security company. It’s that focus, executives say, that distinguishes the 5-year-old company from competitors.

“We’re a security company, and the feature [customers] buy is protecting their assets,” Drake said.

For FireHost, the recent rash of high-profile cyberattacks underscores the growing need for its secure cloud services as more companies confront increasing challenges to protect sensitive information.

And it’s no longer just data at stake. It’s also a company’s brand and reputation, said Jim Hilbert, FireHost’s senior vice president of global sales.

Recent breaches have exposed security vulnerabilities in companies such as Target, Michaels and Community Health Systems. Just this week, Bloomberg News reported that Russian hackers attacked JPMorgan Chase and at least four other banks, resulting in a loss of customer data.

Security discussions are no longer confined to IT departments but are moving to boardrooms, FireHost executives say.

And that leaves a big opening for a company like FireHost.

Security at the core

Technology research firm Gartner recently recognized FireHost in a report evaluating cloud hosting companies. Unlike many service providers that add security on top of cloud services, FireHost has put security at the core of its platform, Gartner said.

“For a relatively young company in a field of well-established competitors, FireHost has been able to expand its footprint quickly due to rapid growth,” Gartner analysts said in a July report.

FireHost has doubled its revenue annually for the last three years, CEO Jim Lewandowski said during a recent interview at the company’s Richardson headquarters.

Lewandowski, a cloud and security executive with leadership roles at Rackspace and McAfee, joined the company in March. He succeeded Drake, who wanted to resume his focus on innovation and technology.

Earlier this year, FireHost raised $25 million in new funding, bringing total outside investment to $59 million since 2011. The capital has come almost exclusively from Little Rock, Ark.-based Stephens Group, a family investment office whose history includes managing Wal-Mart’s public offering in 1970.

The company is using the money to expand its sales and marketing team, continue research and development and hire more security and technology experts. FireHost expects to hire about 120 workers in the next nine months to add to its 190-employee workforce.

To bolster its leadership ranks as it grows, several senior-level managers joined the company in recent months, including Schilling and Hilbert.

FireHost is focused on industries that deal with sensitive data and privacy compliance regulations, such as health care and retail. But executives see broader demand as companies look to the cloud for their IT needs. Their biggest concern is security, according to a survey by 451 Research.

Alkami, which provides digital banking services for financial institutions, became a FireHost customer two years ago. Because the company deals with sensitive financial and consumer data, Alkami founder Stephen Bohanon said it was imperative to find a cloud provider with security expertise. Alkami must ensure data is protected because of compliance regulations its clients must meet.

“The latest threats change constantly,” Bohanon said. “Are we going to be focused on cyberattacks or focused on software? It lowers our risks because we have a team of people who all day long think about security.”

Another customer is Kevin Mitnick, a security expert who knows more about computer vulnerabilities than most. Mitnick was a hacker in the 1980s and 1990s who breached computer systems of several high-profile companies before the FBI caught him in 1995. He served five years in federal prison.

Now Mitnick is an information security consultant. He’s paid by companies to hack into their systems to uncover weaknesses.

A few years ago, hackers were constantly breaching Mitnick’s site because of his Web hosting platform’s lax security. In 2009, FireHost offered to host his website for free after those attacks made the news.

Mitnick still uses FireHost. Except for a few distributed denial-of-service attacks, which flood a site with so much Web traffic that it crashes, Mitnick said, his website has not been seriously compromised.

“I think they do a superior job,” he said. “My site has never been hacked. And I’m a huge target of hackers.”

FireHost boasts it has thwarted 1 billion attacks against its customers. Last year alone, the company said it prevented 100 million hack attempts.

Record ‘speaks for itself’

“We have been attacked billions of times, and we have data to support that, and we have a track record where an incident of any size happens less than one in a billion,” Drake said. “It’s a hell of a track record, and it speaks for itself, and customers rely on that.”

Six months before computer bug Heartbleed was discovered in April, FireHost became aware of the threat and began protecting customers against it, Drake said. The breach exposed millions of credit card numbers and other sensitive information to potential theft by hackers.

FireHost’s security and threat intelligence team spends most its time protecting against potential threats, Schilling said.

“You reduce the risk to the negligible level,” Schilling said. He works closely with chief information security officer Kurt Hagerman, who oversees compliance and risk.

The security team monitors money-seeking cybercriminals out of Russia and Eastern Europe as well as emerging threats from other parts of the world.

For instance, Cunningham, the former NSA cryptologist, discovers potential threats by gathering intelligence. He talks to sources who are well-connected in the Internet’s underground world. He reads chats and forums and mines for threat indicators in the “dark side” of the Internet.

FireHost uses that information to “predictively intercept threats,” Cunningham said. “I literally do things almost exactly like I did when I worked for different intelligence agencies, and now I do it in the corporate setting.”

Amazon has introduced a possible rival to Dropbox, Google Drive, and any other cloud storage services in the market today. The Amazon Zocalo is now available to all customers.

This cloud storage service boasts of being a secure storage and sharing service for the enterprise. Amazon promises feedback capabilities and strong administrative controls for enhanced user productivity.

The Zocalo is accessible from different devices: PCs, tablets, Macs, and smartphones. This makes files very mobile and easily accessible to everyone on the shared list.

Files shared with other users can be commented on. New versions are saved each time to so there is no need for multiple e-mails.

The Amazon Zocalo is now available in these markets: EU (Ireland) AWS Regions, US-West-2 (Oregon), and US-East-1 (N.Virginia). Amazon will offer the storage service to other regions later.

Here is a rundown of Zocalo’s main features:

Simple Document Feedback
Cloud storage service users can leave detailed and overall comments on the documents. Contributors are notified about the review activities and deadlines via email.

Central Hub
Users are shown a central location for documents and files being reviewed and those that have yet to receive feedback from others. Related feedbacks are seen in a single view for easier reading and commenting.

Access and Sync from Any Device
Easy access from any device is possible. May it be on their Android tablet, iPad, or Kindle Fire. The Zocalo Sync client allows automatic syncing on their mobile devices and computer.

What makes the Amazon Zocalo a better cloud storage service? It’s low cost, secure, and easily integrates one’s corporate directory. Cost per user per month is only $5. This includes 200GB of cloud storage.

Amazon is known for its secure services so Zocalo users are assured of a safe place for their documents. A manager using policies can control sharing behavior of files. A user’s existing Active Directory can also be integrated and accessed from the Amazon Zocalo.

"This API is currently internal, but we plan to expose it in the future. If you are interested in building applications that work with the Zocalo API," Chief Evangelist for the Amazon Web Services Jeff Barr wrote in a blog. "We are very interested in learning more about the kinds of applications that you are thinking about building," Barr added.

IN 2004 Amazon, then a $7 billion-a-year online retailer, was starting to build up a technology infrastructure to serve other companies as well as itself. Ten years later, Amazon Web Services (AWS), launched in 2006, is adding enough servers and other gear every day to power the Amazon.com of ten years ago. This breathtaking investment has kept AWS the market leader in the expanding business of cloud computing, which allows firms to lease storage and processing capacity from others, rather than buy and maintain their own servers and data centres. The cloud promised to be revolutionary: it would be cheaper, would keep software more up-to-date and would encourage more collaboration.

But big companies have embraced the cloud more slowly than its fans had expected. IDC, a research firm, estimates that businesses will spend $100 billion on cloud computing this year. That is not to be sniffed at. But it is a fraction of the $2 trillion or so that companies will spend on information technology (IT). Some are holding back because their IT teams claim they can run things more cheaply internally. Others are wary of entrusting sensitive data to another firm’s servers.

Such corporate reluctance may soon start to be overcome, as price cuts make cloud computing cheaper still. At the end of March Google slashed prices by between 30% and 85% on cloud services such as application processing and data storage. The move—aimed at boosting Google’s own cloud-computing business—sparked a swift response from AWS, which cut some prices by up to 65%. Microsoft, which is also determined to be big in the cloud, followed suit with cuts of its own.

Prices are likely to fall further. “We’ve not gotten to the bottom of the curve yet,” says John Dinsdale of Synergy Research Group, which tracks cloud companies. Google likes to tell anyone who will listen that hardware costs for cloud providers such as itself have been dropping by up to 30% a year. “Every cloud provider will bend over backwards to match rivals’ prices,” says Samuel Chesterman, a chief information officer (CIO) of IPG Mediabrands, a media and marketing outfit.

Some clients are already taking advantage. In July Box, which lets people and companies store and share information online, scrapped all limits on storage for business customers. In a blog post announcing the move, Aaron Levie, Box’s boss, says it was able to take this step thanks to “an arms race of gigabytes” between Google, Amazon and Microsoft.

Lower prices should persuade more firms to follow Edmunds.com, a web service that offers information about cars to its 18m monthly visitors. Philip Potloff, the firm’s CIO, says the company is moving its computing to the AWS cloud and expects to save millions of dollars a year.

AWS and others are working overtime to reassure people that data will be secure in the cloud—a job that has been complicated by revelations that Western intelligence agencies have targeted firms such as Google and Microsoft as part of their online snooping. In response, big American cloud firms have stepped up their use of encryption to protect the data they handle. And they have made it clear that they are prepared to store more data locally for clients in other countries if laws require this.

Cloud companies are also jazzing up their basic offerings. In July AWS launched Zocalo, a service for storing and sharing documents which lets people get access to their material anytime and from anywhere. This week AWS expanded Zocalo further. Such additions make the cloud more appealing to firms, though they risk annoying customers of cloud computing such as Box, which offer similar services.

In spite of falling prices, better security and enhanced offerings, plenty of firms remain wary of committing all their computing needs to another company. Hence the popularity of so-called “hybrid cloud” computing. This involves running some software applications on a service such as AWS’s while keeping others on a firm’s own servers. A number of companies with substantial cloud-based businesses, such as IBM and Rackspace, are promoting hybrid offerings in a bid to compete with the likes of Amazon and Google.

For the next few years, hybrid cloud arrangements may well dominate, especially in industries such as health care and banking where companies like to keep some dedicated hardware of their own, to ensure they comply with standards laid down by regulators for handling sensitive data. But AWS and its rivals are steadily amassing approvals from regulatory and industry bodies to show they meet such standards, too. Assuming they can keep driving down costs further, their clouds look set to engulf many more firms.

If there was any lingering doubt, it appears the cloud is truly here. Many organizations around the world have adopted or are taking steps to adopt cloud computing, with Gartner predicting that nearly half of all large companies will be using hybrid cloud within the next three years.

With benefits such as efficiency, cost-effectiveness and scalability well advertised, this rise in uptake is hardly surprising. As with any other major organization-wide implementation projects, however, adopting the cloud is no walk in the park – and enterprises need to take steps to enjoy a smooth and seamless migration.

According to the 2013 TheInfoPro Cloud Computing Study from 451 Research, 83 percent of organizations in North America and Europe said they faced"significant roadblocks to deploying their cloud computing initiatives" – a nine percent increase from the previous year’s survey. It is interesting to note from the findings that while IT roadblocks have actually decreased, non-IT challenges, such as "people, processes, politics and other organizational issues", are on the rise – indicating that collaboration across the entire enterprise is required.

While the path to cloud adoption can be challenging for some, there are a few guidelines the CIO can keep in mind to ensure as smooth a process as possible.

Know what you want from the cloud
It would certainly not be logical for enterprises to move to the cloud simply because everyone else is doing it.

Every organization is different and while the cloud can certainly provide significant benefits, it’s important to know what your organization’s key business needs are and where the cloud fits into the picture. Have a clear idea of in which areas the cloud can help your business, and where its limitations are. Involve all key stakeholders in the decision making process to manage expectations and keep everyone on the same page.

Choose the right cloud platform
Hybrid, public or private cloud – with so many options, just how do you know which cloud model to choose?

This should be one of the questions you answer in the initial stages as you finalize your cloud strategy. Each type offers its own unique advantages and depending on your organization, its size and the nature of its operations, there may be a particular model that best suits.

For example, is your company experiencing rapid growth and scalability is thus an issue? Are you looking for convenience and ease of use or are you more concerned about having control and governance? Be sure to know what you’re looking for before moving to the cloud.Give security serious consideration

The rising digitization of businesses is making security an increasingly high priority, and this is therefore a factor to take into account when adopting the cloud. The reality is that while the cloud is becoming more robust, data breaches can occur. However, having the right measures in place can reduce the risks.

Cloud providers recognize this and are beefing up their offerings to lower the likelihood of customers being affected, but there does need to be some effort on the part of your organization as well. Your overarching IT security policy should take the cloud into account, and get the IT team on board to weigh in and rectify the likely risks your enterprise may face when moving to the cloud.

Have the right people on board
It can be tempting to believe that your organization has the necessary in-house talent to facilitate cloud adoption. However, it is a complex undertaking in which you simply can’t rely on generalist IT staff to navigate the procedure. The rise of cloud computing means there are now people who are formally certified and qualified to tackle the technology, so make sure you have access to these professionals – whether in your staff or external specialists.

According to the 2014/2015 Market Insights & Salary Guide from IT recruitment firm Greythorn in Australia, both IT job seekers and hiring managers rank cloud computing as the number one skill needed in the sector today. This perception has not changed from the previous year’s survey.

With the right people on your team, you can plan a move to the cloud is as stress-free as possible.

What’s not to like about the cloud? It fits well into the way businesses operate today — remotely, collaboratively, and globally. It also helps to get rid of one of computing’s worst security threats: portable storage devices like thumb drives and hard drives that are easily lost or preloaded with malware.

And therein lies the irony – there are still a lot of businesses that are hesitant to migrate data to the cloud because of security concerns. For example, the Bitglass-sponsored Cloud Adoption Report found that more than half of large companies and a third of SMBs have delayed cloud adoption primarily because of security-related worries. And as Chris Talbot writes in Talkin’ Cloud, “But not only that, concerns about security are not only not decreasing; they’re increasing. A previous report from October 2011 indicated 25 percent of businesses expressed some concern over cloud security, but that figure increased to 42 percent in July 2013.”

Or as Rajat Bhargava, co-founder of cloud security startup JumpCloud, states in a Tech Times article, “When you don’t own the network, it’s open to the rest of the world, and you don’t control the layers of the stack, the cloud – by definition – is more insecure than storing data on premises.”

Even cloud enthusiasts have begun to express concern over cloud security and what it means for the future of cloud computing. According to that Tech Times article, 66 percent of the Open Data Center Alliance believe that cloud security woes are hurting cloud adoption. If companies are shying away from the cloud because of security concerns, does this mean we’re seeing the demise of cloud computing?

No, says Luis Corrons, the Technical Director of PandaLabs at Panda Security, but security concerns does influence the way we view cloud computing as a whole. “For example, nowadays many European companies are looking for alternatives to U.S. cloud computing providers mainly due to all the NSA scandal,” he explains. “But all benefits that companies can obtain from cloud services clearly exceed their security concerns.”

But the security apprehensions still need to be addressed if cloud migration is going to show any benefit to companies. According to Matt Goche, head of the Information Security Consulting practice at Sungard Availability Services, specific concerns that need to be addressed include: A) is my data protected from outsiders — same issues that organizations have if not using cloud; B) is my data protected from other tenants — unique to cloud; and C) is my data protected from the cloud provider themselves — unique to cloud.

“As long as B and C are being thoroughly evaluated, it is likely that A will improve when moving to the cloud based on expertise of provider over limited in-house expertise,” says Goche.

The best way to approach cloud security, Corrons believes, is not through more regulations, but rather through the free market. “More regulation doesn’t necessarily translate into more safety, and doesn’t guarantee at all that attacks won’t happen,” he says. “Cloud computing providers are more than aware of the risks they are exposed to, they are handling all kind of sensitive information which is of great value, and as such they have to take security measures as otherwise they could lose their customers. If people don’t trust a company, they will stop storing their information there.”

And there has been improvement in cloud security in recent years, as cloud providers have taken more responsibility for their clients’ data. The best security is built into the cloud from the beginning, rather than incorporated later on.

Remember, too, that it wasn’t too long ago when we wondered if PCs would be able to withstand the onslaught of security threats they faced. Security has never been intuitive to computing; it’s been an afterthought, based on need and reaction rather than actual prevention. Yes, there are kinks in cloud security, but if cloud adoption is approached wisely, security will fall into place.

Operating without some form of cloud infrastructure in place seems practically unthinkable for many enterprises today. Thanks to the exponential rise of the technology, organizations are now able to store and manage their data with levels of speed and efficiency once thought impossible.

As organizations consider how to move to the cloud, they face three options: private, public or hybrid. Paul Cormier, Red Hat’s president of Products and Technologies, said that this “could be the most critical decision [CIOs and IT managers] make in this decade.” Although the private and public cloud offer their own distinct advantages, recent indications suggest that an increasing number of organizations are attracted to the "best of both worlds" allure of the hybrid cloud.

Last year, Gartner predicted that almost half of large organizations will be using hybrid cloud by as early as 2017.Let’s explore the appeal of hybrid cloud and what makes it an increasingly tempting choice for the CIO.

Cost efficiency
Businesses of all sizes are constantly looking to cut costs, and adopting the hybrid cloud could be a way of achieving this on the computing front.

By having a portion of your cloud deployment on the public platform, you can enjoy the economies of scale it offers while still maintaining an element of independence and detachment. You’re only paying for what you use, enabling you to keep accurate track of your cloud operating costs.

Security
Security – or the perceived lack thereof, particularly with public cloud – has been a major sticking point as more companies consider adopting the cloud. With thousands of users having access to your same infrastructure, a little apprehension is perhaps inevitable.

The hybrid route resolves this problem to a degree, as you can enjoy the convenience of operating on the public cloud while still keeping your sensitive operations internal, away from prying eyes. You have the ability to tweak restrictions, such as those relating to access, so you can control exactly how much of your information is available, and to whom.

Scalability and flexibility
The fusion of private and public cloud means that you can expand your architecture in line with business growth, while still maintaining control over operations. Your company’s growth is not checked by limitations such as hardware requirements.

The flexibility of the hybrid cloud also makes logistical sense. Most organizations want the benefits that private and public clouds offer, yet are hesitant about making the leap to a joint infrastructure. Hybrid cloud is an obvious solution, as it grafts the scalability and cost efficiency of public clouds with the security and control of private servers.

Experts predict that the platform will grow in popularity in the future. Gartner, for one, expects 2016 to be "a defining year for cloud as private cloud begins to give way to hybrid cloud."With so many distinct advantages, it is easy to argue that hybrid cloud offers possibly best path to the cloud for many organizations.

These days, everyone wants a piece of the cloud. Technology mergers and acquisitions are on a tear for a blockbuster year, and cloud computing is responsible for much of this burst of activity.

That’s the word from EY, which finds clouds lurking behind many transactions in its latest review of M&A activity in the second quarter of this year (April to June). In total, $52.4 billion in deals were conducted across the globe, a 57 percent year-over-year increase. Cloud and smart mobility directly drove 42 percent of technology deal-making, EY estimates.

The tech world is changing faster than ever, leaving even the most savvy vendors gasping for breath (witness Microsoft’s recent struggles to keep up with the shift to mobile and cloud). The rise of cloud models means the rise of new players. The market goes to those who assemble the right mix of skilled staff and technology innovation to offer the most compelling value proposition to customers. Sometimes, parts of that combination can be bought. Cloud means new methods of delivery, new product sets, and radically changed customer expectations.

Cloud drove many lucrative deals in recent months. Of the dozen 2Q14 deals greater than $1 billion, three-quarters targeted internet or cloud/SaaS companies or firms linked to the so-called Internet of Things trend. Deal values increased across a broad swath of sub sectors. “Nothing less than a technology-induced reinvention of all industries has begun, moving toward ‘sense and respond’ relationships between businesses and their customers and driven by the five transformational technology megatrends: smart mobility, cloud computing, social networking, big data analytics and accelerated technology adaptation,” says EY’s Jeff Liu.

Some examples of cloud-fueled deals cited by EY include the following:

SanDisk Corporation acquired Fusion-io, Inc., a deal tied to the cloud-driven growth of high-performance data center storage solutions.
Zebra Technologies announced a $3.5 billion deal to acquire the scanner business of Motorola Solutions. As EY notes: “Zebra executives noted in their deal-announcement conference call that the combined companies would have a range of technologies that enable mobile workers in the context of the IoT, including RFID sensors, ruggedized mobile devices and a cloud-based platform for developing IoT applications that can integrate, analyze and act on data from multiple sensor-based sources.”
Cloudera Inc. acquired Gazzang, provider of cloud-based encryption software.
Fair Isaac Corporation (FICO) acquired Karmasphere, Inc., a Hadoop query construction and collaboration software vendor, to provide an interface for its FICO Analytic Cloud.
Microsoft acquired GreenButton, a provider of cloud middleware software, to add high-performance computing capability to its Azure cloud.
Atos, an IT services vendor, plans to acquire Bull for $847 million. “Atos reportedly is seeking to capitalize on Bull’s strengths to become a larger player in cloud computing services, security and big data analytics,” EY reports.

The EY report observes that “cloud/SaaS technology was a key enabler for a broad spectrum of these deals, and many had security or big data analytics aspects — or both. The volume of deals targeting those three technologies all increased faster, on average, than total global volume.” Cloud/SaaS deals were about 70 percent higher in 2Q14 than their 2013 average quarterly volume, EY also states.

Six years ago when most enterprises were still trying to figure out what cloud computing means, Apeejay Stya and Svran Group decided to take the entire $1-billion-plus conglomerate to cloud. Today, the familyheld group’s entire IT infrastructure is on Amazon cloud.

"We wanted to have a standardised IT infrastructure for all our group companies across 52 locations and cloud was the best way to do it," said Aditya Berlia, a management board member of the Delhi-based group.

The company has moved all its servers, including the missioncritical ones, to Amazon Web Services (AWS), reducing its internal IT staff to three from 23 and cutting IT costs by over 80 per cent. "The best part about AWS is that whenever I talk to them once in three months, they come up with a new way to reduce my cost, as against others who are constantly trying to dig into my pockets," Berlia said.

They are not alone. There are over 8,000 companies in India that have already boarded the AWS ship, including large enterprises such as Tata Motors, Reliance Entertainment, NDTV, Narayana Health, Macmillan India, EROS International, Malayala Manorama and Sony Entertainment.

Reliance Entertainment has 40 per cent of its total IT workload on AWS. "When we thought of adopting cloud computing for our variable volumes and games apps, AWS was the one which we have adopted from inception," said its CEO Manish Agarwal.

Amazon is pushing its cloud services in India by not only reducing prices on a regular basis but also by promising cost reductions to customer. "We have lowered prices 45 times since 2006 with no external pressure to do so," said Bikram S Bedi, head of Amazon Web Services India. "AWS is very comfortable with running high volume low margin businesses, which is deep in our DNA," he added.

Tata MotorsBSE 0.19 % has moved many non-critical applications to AWS. "Our customer-facing systems and our collaboration systems are on the cloud," said Jagdish Belwal, CIO at Tata Motors. "For us, the public cloud, is just a mode of delivery. We have our customer, dealer portals on the cloud because it is a more scalable model," he said.

Belwal believes that once Amazon sets up its data centre in India, the public cloud market will become more interesting as now there are some territorial issues in holding the data in the country.

Amazon’s aggressive pricing has also forced its competitors to make similar price cuts, making cloud computing more compelling for Indian enterprises. And competition is increasing in the cloud market. IBM has been spending millions of rupees advertising its Softlayer cloud as it tries to challenge AWS’ dominance while Microsoft has indicated plans to set up a data centre in India to push its cloud offerings in the country.

About 30 per cent of chief information officers (CIOs) in the country are using some kind of public cloud, according to Gartner.

"The public cloud is increasingly growing as an option. While SMBs (small and medium businesses) are the biggest users of the public cloud, even large corporates are exploring them in a more piecemeal fashion for projects that are more peripheral critical," said Naveen Mishra, research director at Gartner.

He, however, believes large-scale adoption of cloud among Indian enterprises is still some time away. "It will take another two or three years before corporates start using the public cloud in a strategic manner. Part of that is because of the ageold concerns — network connectivity, availability and even data privacy," Mishra said. "But that could change as public cloud providers start investing in data centres in India."

CenturyLink is a fascinating case study in reinvention. Formerly you’d have been forgiven for lumping the company in with all the other telco dinosaurs – big, old, slow and destined to a painful demise. CenturyLink CTL +0.32% has a corporate history that spans close to a century and over that time has moved through several different paradigms of the telecommunications industry.

The latest paradigm, and one which CenturyLink seems to be adapting to with aplomb, is the broader trend towards cloud computing. As traditional voice services quickly become replaced by lower cost (and hence, lower margin) IP telephony, CenturyLink has looked far and wide to bolster its business by embracing the cloud. A number of smart acquisitions (cloud infrastructure provider Savvis, PaaS vendor AppFog and cloud heavyweight Tier3 for example) has seen it become a real force in this latest incarnation of ICT.

Today the developments keep coming with news that CenturyLink is launching a global private cloud offering. Offered across 57 individual data centers, each instance within the private cloud offering is federated into the CenturyLink network of public cloud nodes, thus giving a single interface for both public and private cloud infrastructure. The private cloud offering sits on an identical platform to the public cloud one, allowing for seamless interplay between resources.

It is interesting to look at this news in context of where CenturyLink is as a vendor. They have a large existing colocation business but, as Rackspace has learned over the years, parlaying that into a public cloud business is very difficult. Colocation and public cloud seemingly have no connection in the minds of enterprise IT. What are connected however is a colocation to private cloud progression and the value proposition of a consistent federated public/private cloud hybrid. As such, CenturyLink is providing what can best be described as a gateway drug – by making IT’s decision to move from regular old hosting to private cloud that much easier, they also massively increase the chances that those same customers will, in time, move to public cloud. It is a similar model to that being delivered by VMware VMW +0.93% with its vCHS service. It’s an intermediate step which makes total sense from a product, marketing and positioning perspective.

Make no mistake, no matter what your view is regarding the “end state” of cloud computing, the reality today is that organizations, for the most part, demand a hybrid offering. This announcement is both a logical step for an enterprise-focused vendor like CenturyLink but, perhaps more importantly, a case study for how threatened legacy businesses can reinvent themselves to remain relevant.